Nevada continues to be a strong market for industrial development, but rising land costs are a concern, especially in Las Vegas. Developers who already have land to build facilities for manufacturing, warehousing and distribution are in good shape, but those who don’t must compete with residential developers who are paying high prices for land because of the residential boom.
The good news in Las Vegas is that several projects are in the works in the southern area of the Valley. This area benefits from its proximity to McCarran International Airport and the Interstate 215 Beltway, which has improved transportation to all areas of the Valley. The industrial boom in North Las Vegas continues, with the Cheyenne Technology Corridor leading the way. The five-mile corridor stretches from the North Las Vegas Airport to the Community College of Southern Nevada.
“The lack of industrial land is very concerning,” said Rick Myers, president of the Southern Nevada chapter of the National Association of Industrial and Office Properties (NAIOP). “Residential builders are buying up the available land and they are outbidding the industrial users. Is that good for the community in the long run? We need the goods and services that industry supplies.” New industry also diversifies the economy, which is heavily dependent on gaming, Myers said.
“They (residential developers) are paying double or triple what industrial developers will pay for land,” said Dan Doherty, an executive with the Las Vegas office of the commercial real estate firm Colliers International.
Reno is benefiting from an improved national economy and also from its foresight in building industrial centers in outlying areas where land is cheaper, said Paul Perkins of Colliers International in Reno. Reno’s success has been fueled by its reputation as a major distribution center for 11 western states.
“In the middle of last year, our market came back with a vengeance,” said Dave Shuster of Grubb & Ellis in Reno. Its vacancy rate has dropped a full percentage point to 10 percent during the comeback. Las Vegas’ vacancy rate fell to 9.8 percent in the first quarter of this year, compared to 10.1 percent the previous quarter, according to a report from Colliers International. This came at a time when 1.2 million square feet of industrial space was added.
North Las Vegas Leads the Way in Southern Nevada
“North Las Vegas is getting the overriding majority of new industrial development,” Doherty said. “It is the only area with affordable land. North Las Vegas currently has a two- to two-and-a-half-year supply of industrial space.”
One of the top projects in the Cheyenne Technology Corridor is NorthPort Business Center, which is 73 percent leased on phase two of the project, said Mike Carroll of Jackson-Shaw, one of five companies that have joined forces to develop land along Cheyenne Avenue.
Jackson-Shaw built a 126,000-square-foot first phase, recently completed the 80,000-square-foot second phase and plans to finish a 66,000-square-foot building in the second quarter of next year. The 24-acre park at Allen Lane is designed for light industry and office users and has attracted DynCorp (information technology services) and C. Martin Company Inc. (military range manager).
Jackson-Shaw is also marketing a new center for large industrial companies, Northeast Crossing, located on 28 acres at the Cheyenne Avenue-Lamb Boulevard intersection. About 570,000 square feet is planned for the center, with 190,000 square feet coming on line early in 2005, Carroll said.
“If you are looking for space right now, you are in good shape, but that’s not going to last must longer,” said Doug Roberts, a regional partner with Panattoni Development Corp.
The company’s 26-acre Lamb Business Center at the Lone Mountain Road intersection is considered one of the best new projects in North Las Vegas, according to real estate leasing executives. Artesian Spas is leasing a 100,000-square-foot building that will be started this summer. Two other buildings (180,000 square feet and 53,000 square feet) are also scheduled for completion by February.
The Cheyenne West Corporate Center at the Simmons Street intersection is another project in the high-tech corridor. RDS/Insight Development has sold seven buildings in the 40-acre, mixed-use project. It has developed 200,000 square feet of space with another 100,000 square feet (50 percent industrial) coming on-line late this year. The project features a 3-acre retail center, said Rick Smith of RDS/Insight.
Also in North Las Vegas, the 350-acre Golden Triangle Industrial Center at Craig Road and Interstate 15 is being financed by the Operating Engineers Pension Fund Trust of Pasadena, Calif. The 200-acre park has nearly 2 million square feet of industrial space, including two new buildings with combined space of 500,000 square feet. The pension fund eventually plans to develop 4.5 million square feet with the timetable depending on market demand, said Donna Alderson of CB Richard Ellis.
“The industrial market is definitely on the upswing after being soft the past couple of years,” said Brad Myers, Las Vegas regional manager for DP Partners, a company developing the LogistiCenter, an industrial center on East Gowan Road between Pecos and Alexander roads. “But you can’t just jump in and buy land now with the prices the way they are.”
The company has completed a 266,000-square-foot building that was 73 percent leased at mid-year and plans to complete a similar sized building later this year. Long-range plans call for 2 million square feet of space.
Developers such as Thomas & Mack Development Group, EJM Development Co. and Majestic Realty Co. have leased land from the Clark County Department of Aviation with easy access to the freeways and McCarran International Airport, Doherty said.
Thomas & Mack and Majestic have joined forces to develop the 400-acre Beltway Business Park along the southern leg of the Beltway. It is on the south side of Interstate 215 between Rainbow and Jones boulevards.
Thomas & Mack is known for its expertise in developing single-story, flex office space and multistory office buildings, while Majestic specializes in big-box industrial projects. The developers have already built the 850,000-square-foot headquarters for GES Exposition Services in the park. Thomas & Mack is marketing two new single-story buildings with a total of 102,000 square feet of space, which are suitable for offices and light manufacturing.
“We are looking at companies locally and outside the market for corporate headquarters facilities (in the park),” said Rick Myers, who is a Thomas & Mack executive as well as president of the local NAIOP chapter.
The companies also have a joint venture to develop the $80 million, 103-acre Northern Beltway Center in North Las Vegas, which will consist of six to eight buildings with a total of 2.2 million square feet at I-215 and I-15. The center will be designed for large manufacturing and warehousing operations and is scheduled for completion in the second quarter of 2005.
EJM recently started developing The Arroyo, a master-planned 450-acre project, which will have 4.5 million square feet of industrial, office and retail space. The project straddles the southern 215 Beltway and is located between South Rainbow Boulevard and Buffalo Drive. Construction started in April on 310,000 square feet of industrial space in three buildings, which are scheduled for completion in January. The project can accommodate small and large distributors and manufacturers, said Kirk Boylston, director of EJM’s Nevada region.
“It’s a one-time opportunity to do a project like this,” Boylston said. “We can do something that is truly a mixed-use, master-planned project. This is something that has been lacking in Las Vegas.”
EJM has completed and leased two more buildings totaling 140,000 square feet in its 110-acre Arrowhead Commerce Center on South Sandhill Road in Green Valley. EJM had developed 800,000 square feet in the center and has 40 acres remaining for the development of 400,000 additional square feet of industrial space. EJM will break ground later this year on three buildings totaling 300,000 square feet.
Centra Properties plans to break ground in October on a 30-acre center at South Rainbow Boulevard and the southern 215 Beltway. Centra Park eventually will contain half a million square feet of industrial space. The company recently completed development of Centra Craig Distribution Center (720,000 square feet) at Craig Road and Flossmoor Street. Three of the five buildings in the center are completely leased, said Doherty, who is handling the project for Colliers.
There are other pockets of industrial development in the Valley. The Juliet Corp. is developing the 110-acre Blue Diamond Industrial Park at Blue Diamond Road and Valley View. One 60,000-square-foot building is finished and leased, and Juliet eventually hopes to build 1.5 million square feet in the center, said Suzette LaGrange of CB Richard Ellis.
Park View Center North, developed by Insight Corp., recently completed the first phase of 76,000 square feet of mixed-use space near the Sunset Road-Eastern Avenue intersection. Danny Mulcahy of Insight said the next phase, which will be 50 percent industrial, will include 200,000 square feet and will be finished in the fourth quarter. The project will have half a million square feet of industrial, office and retail space when finished in two years.
Harsch Investment Properties, which developed the 13-acre Henderson Commerce Center at Warm Springs Road and U.S. 95, is building Henderson Commerce Center II nearby. The company plans to complete 74,000 square feet for small and medium-sized industrial companies by the second quarter of 2005.
Harsch is also building Henderson Commerce Center IV on a 42-acre parcel further south on Warm Springs Road. The first phase will offer 300,000 square feet for larger industrial users and should be ready by the second quarter of next year. Henderson Commerce Center III is in the planning stages.
The company is also halfway through development of the Cheyenne Commerce Center in the Cheyenne Technology Corridor at the Revere Street intersection. About 101,000 square feet of space for light industry will be completed this summer with an equal amount of space scheduled for completion in the second quarter of 2005.
LaPour Partners, which developed the 143,700-square-foot Diablo Commerce Center in southwest Las Vegas, has 10 industrial buildings (4,500 square feet to 10,500 square feet) for sale at its WesTech Business Park at South Decatur Boulevard near Russell Road. Nearby Decatur Crossing, a 40-acre park, is being developed in three phases starting early next year.
Northern Nevada Development Moving to Outskirts
The Truckee Meadows in southern Reno has seen a wide variety of development, but is running out of available land, industrial leasing executives said. Nevertheless, the community has promising industrial parks in other directions outside of Reno where land is cheaper, Grubb & Ellis’ Shuster said.
Companies looking for distribution sites, both large and small, will continue to fuel Reno’s industrial growth, but the manufacturing sector is increasing, real estate executives said.
Fernley, which was once a sleepy town and is now a booming community of 12,000 about 30 miles east of Reno, will be a strong market for new projects, Shuster said.
The Nevada Pacific Industrial Park in Fernley and Tahoe Reno Park, halfway between Fernley and Reno, are 5,000-acre projects with plenty of room for new development, said Shuster.
Nevada Pacific Industrial Park has made deals with six major companies to locate in the park and has other candidates pending, said Patty Wade-Snyder, president of Wade Development. Wade Development has built 3.5 million square feet of space and will add about 1.5 million this year, she said. Long-range plans call for development of 75 million square feet of industrial and retail space.
Stead, which once housed an airbase 10 miles north of Reno, is also promising. Silver Lake Park has 150 acres of the several hundred acres available in Stead for development, Shuster said. The potential is much greater because the Airport Authority of Washoe County has 5,000 acres in Stead – which by law it can lease but not sell – available for development.
Development of the Lear Industrial Center, a 100-acre project, in Stead will start late this year, said Panattoni’s Roberts. Plans call for development of 2 million square feet for large industrial companies. The company also has the 70-acre Red Rock Business Center at Stead, which has large industrial tenants and is about 85 percent complete.
DP Partners is developing the 150-acre Silver Lake and 100-acre Sage Point business parks in Stead. Its strategy has been to sell land to major companies such as Michelin and Dupont in Silver Lake and Overhead Door and Mack Trucks in Sage Point. Kirk Olsen, leasing and development manager for DP Partners, is confident the company will make deals for the remaining 60 acres in Silver Lake and 40 acres in Sage Point.
The 411-acre Spanish Springs Business Center north of Sparks is benefiting from large out-of-state companies looking for new distribution and warehouse space, said Jesse Haw, president of HAWCO, the developer of the project. The center can accommodate large and small companies. Haw said at least 400,000 square feet of industrial space will be built this year, which will double the size of the project.
